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Novozymes teams up with Cofco, Sinopec on bioenergy

By Wan Zhihong (China Daily)
Updated: 2010-09-09 10:10

Workers check a biofuel facility in Nanyang, Henan province. Construction projects of biofuel facilities are estimated to be worth up to $14.1 billion. [Chen Yanwei / for China Daily]

BEIJING - Danish biotech company Novozymes said on Wednesday that it is banking on the rapid growth of China's bioenergy industry to boost its portfolio in the country, the company's second-largest overseas market.

The company has teamed up with the country's leading agricultural products manufacturers, Cofco Group and China Petroleum & Chemical Corporation (Sinopec), to build a second-generation bioethanol demonstration project, in which Novozymes will supply with enzymes.

The cellulosic biofuel project, which develops ethanol from corn stover, is different from first-generation projects, which turn crops like corn and sugarcane into fuel.

Construction of the project is expected to start next year. The company is also considering working with Chinese partners to build commercially operational facilities after the launch of the pilot project, said Novozymes President and Chief Executive Officer Steen Riisgaard.

The company also plans to add enzyme production facilities in northeastern China, where there are rich agricultural resources, he said.

The biofuel business currently accounts for around 18 percent of Novozymes' total portfolio, as the company is involved in many corn-based fuel projects, said Riisgaard.

That figure is smaller in China, but the rapid growth of China's biomass energy sector will offer the company many opportunities, he added.

"We have seen double-digit growth since we entered the market. The country now has around 20 percent of our total employees," said Riisgaard.

China should defend its turf, says Supachai Related readings:  COFCO eyes dual listing in 3 years  Novozymes invest in Tianjin for pharmaceutical business  Novozymes bio-innovation reaches for future  COFCO Property net profit up 163% in 2009

According to a report jointly conducted by Novozymes and consulting company Mckinsey & Company, cellulosic ethanol can be substituted for 31 million tons of gasoline in China by 2020, cutting the nation's oil imports by 10 percent. The industry will also bring about construction projects with a total value of 96 billion yuan ($14.1 billion), said the report.

Analysts say that development of cellulosic ethanol fits well with the country's target of generating 15 percent of its energy from non-fossil sources by 2020. But the technology has yet to mature and may take at least five years to be successfully commercialized.

Cofco is now moving up the biofuel technology ladder and, in the long term, wants cellulosic ethanol to become its core business, Yue Guojun, assistant president of Cofco, said in an interview with China Daily.

Guo Shunjie, senior manager of the biochemical and bioenergy division of Cofco, told China Daily that the company expects to start selling cellulosic ethanol commercially within the next few years.

Policymakers are designing preferential tax and subsidy policies for cellulosic ethanol, which will help in its large-scale commercialization, Guo said.

According to a recent report from the World Bank, China needs an additional investment of $64 billion annually over the next two decades to implement an energy-smart growth strategy.

Such investment should be aimed at making the energy and transportation sectors more efficient and promote the development of renewable energy, according to the bank.